How to make $100,000+/Year from Stocks✅ 6 Steps

Here's a comprehensive summary of the YouTube video transcript:

Key Concepts

• Math Matters: Emphasizing data-driven decisions over emotions in stock market investing.
• Projections: Creating bull, base, and bear case scenarios for company growth.
• Surviving Bear Markets: Strategies to protect capital during market downturns.
• GVD (Growth, Value, Dividends): A diversified portfolio approach.
• Balance Sheets: The importance of companies with strong financial health.
• Cyclical Business Models: Avoiding businesses prone to extreme ups and downs.
• Avoiding Greed: Resisting speculative strategies like call options and margin.
• Buying During Corrections/Crashes: Strategic opportunities to invest heavily.
• Cashing Up: Taking profits during bull markets when valuations become excessive.
• Focusing on Process: Prioritizing disciplined execution over immediate profit goals.

Portfolio Milestones and Performance

The speaker celebrates a significant milestone: a public portfolio has surpassed $4 million in value, having been started in 2018. Every transaction within this portfolio has been documented in a private stock group. The recent strength of this portfolio is largely attributed to AMD stock.

Key Performers in the Public Portfolio:

• AMD: 108% gain
• Celsius: 156% gain
• SoFi: 238% gain
• Meta: 524% gain
• ELF: 1,911% gain
• Palantir: Nearly 2,400% gain

For the current year, the speaker has booked $668,000 in profits from this single public portfolio. When combined with private portfolios, the total profit for the year is expected to be in the seven or even multi-figure range.

Six Steps to Making $100,000+ Annually in the Stock Market

The video outlines six key steps for investors aiming to achieve significant annual profits.

1. Math Matters

• Core Argument: Emotions and feelings are detrimental to stock market success; objective mathematical analysis is paramount.
• Supporting Evidence/Example:
  • Investing in Amazon in 1999 and holding for a decade (until 2009) resulted in a loss, despite the company's strong leadership (Jeff Bezos, Andy Jasse) and a clear e-commerce future. This illustrates that even with a perceived good company, poor timing and valuation can lead to zero returns over a significant period.
  • Conversely, investing in Amazon in 2001 and holding for the next decade yielded a 3,000% return. This highlights the impact of entry valuation.
  • Further, investing in Amazon in 2011, even after a 3,000% gain in the previous decade, resulted in another 3,700% return by 2025, demonstrating that continued mathematical analysis is crucial.
• Methodology for Running the Math:
  • Projections: Develop three scenarios: a bull case, a base case (expected outcome), and a bare case for a company's future performance.
  • Data Sources: Utilize company SEC filings, conference calls, and market experience.
  • Amazon 2025 Projection Example:
    • Bull Case: 14% annual revenue growth, 20% annual net income growth, 12% net margins, leading to a stock price of $500-$550 by 2029, with a CAGR over 20%.
    • Base Case: 12% annual revenue growth (e-commerce, AWS, ads), 18% annual net income growth, 33-38 P/E ratio, resulting in a CAGR around 20%.
    • Bare Case: 10% revenue growth, 15% net income growth, 30-35 P/E ratio.
• Key Takeaway: Buying at the right valuation when the math and business model align leads to significant profits. Overpaying for stocks, even good ones, can lead to massive losses and hinder the goal of making six figures annually.
• Tool Mentioned: Thousandx.com is presented as a platform to assist with running these projections.

2. Survive the Bear Markets

• Core Argument: Protecting capital during bear markets is crucial for capitalizing on future bull market gains. Ruining your portfolio in a downturn prevents you from benefiting when the market recovers.
• Analogy: Surviving a tornado requires having a shelter already built, not trying to build one when the tornado hits. Similarly, preparing for a bear market must happen during the bull market.
• Preparation Strategies:
  • GVD (Growth, Value, Dividends): Maintain a diversified portfolio across these three categories. They serve different purposes and perform differently in various market cycles.
    • Bull Market: Growth stocks often outperform.
    • Bear Market: Value and dividend stocks tend to be more resilient.
    • Strategy: Do not abandon any category; maintain exposure to all three.
  • Invest in Companies with Great Balance Sheets: Companies with substantial cash reserves and low debt are better positioned to weather economic downturns, avoid bankruptcy, and refrain from diluting shareholder value through capital raises at unfavorable terms or taking on high-interest debt.
  • Own Few or No Cyclical Business Models: Cyclical businesses (e.g., steel companies) perform well in uptrends but decline sharply. They are generally not ideal for long-term holding unless bought at extreme lows during a severe downturn.
• Portfolio Example: The public account ($4 million+) is cited as an example of a portfolio containing a mix of growth, value, and dividend stocks, each serving a specific purpose, akin to different positions on a football team.
• Consequences of Imbalance: A portfolio solely of growth stocks might be fun short-term but risky long-term. A portfolio of only value/dividend stocks might underperform significantly during bull markets.

3. Avoid the Greed

• Core Argument: Greed leads to speculative and risky behaviors that can wipe out portfolios.
• Manifestations of Greed:
  • Call Options: Using options to magnify potential gains, but also potential losses. The speaker notes that if they had used call options instead of shares in 2022-2023, their portfolio could be $10-20 million, but also could have been $0.
  • Margin: Borrowing money to invest. The speaker shares a personal experience of dabbling in margin around 2015, which did not end well.
• Data Point: Over $1 trillion is currently out on margin, a 33% increase year-over-year, indicating heightened risk.
• Consequences: Using margin or speculative strategies during a bull market, especially when valuations are high, can lead to margin calls and catastrophic losses during market downturns. A 15% S&P 500 drop can decimate portfolios leveraged with margin and speculative stocks.
• Contrast: While others might lose 80% of their portfolio in a downturn due to greed-driven strategies, a disciplined investor might see their portfolio drop to $3.1-3.5 million from $4 million, allowing them to recover and grow.
• Key Takeaway: Avoid margin and speculative instruments like call options, especially during extended bull markets.

4. Buy Heavy During and After Corrections/Crashes

• Core Argument: Market corrections and crashes present the most significant opportunities for wealth creation.
• Historical Evidence: The S&P 500 has never failed to recover after a crash. Buying heavily during these periods and in the subsequent six months has historically led to substantial gains.
• Examples: This strategy has proven effective through the Great Depression, the 70s/80s crashes, the Great Financial Crisis, the 2018 correction, and the 2022 correction (where the NASDAQ dropped 37%).
• Personal Experience: The speaker's public account grew from approximately $1 million three years ago to over $4 million today, largely due to being invested in top companies during the recent bull market following a significant downturn.
• Key Takeaway: Deploy as much capital as possible during severe market downturns and the following six months. The biggest money is often made in the years immediately following a crash.

5. Cash Up

• Core Argument: During bull markets, as valuations (specifically forward P/E ratios) become excessively high, it's prudent to take profits and increase cash holdings.
• Guideline: When the forward P/E ratio exceeds 20 during a bull market, consider cashing up. This becomes more critical as the P/E ratio climbs higher (e.g., 35).
• Caution:
  • Never go over 30% cash: Holding too much cash can lead to missing out on market gains, as seen with investors who became too bearish at the end of 2022/early 2023 and are still on the sidelines.
  • Missed Opportunities: Many stocks (Meta, Shopify, Netflix, Nvidia, AMD) are unlikely to return to their previous lows. Waiting for a massive crash to buy back in might mean missing significant future growth.
• Exception: In severe recessions, company earnings can drop dramatically, making forward P/E ratios appear high. In such cases, a higher P/E might be acceptable.
• Strategy During Crashes: It is acceptable and advisable to go to extremely low cash levels during a crash or major correction, as these are prime buying opportunities.
  • Examples: The speaker was very low on cash during the 2018 correction and Q4 2022, when the NASDAQ experienced a significant drop (over 35%), comparable to the Great Financial Crisis and the tech bubble.

6. Don't Focus on Trying to Make Six Figures a Year

• Core Argument: The focus should be on the process of investing, not solely on the monetary goal. Obsessing over the target amount can be counterproductive.
• Analogy: Great football coaches (e.g., Nick Saban, Bill Belichick) focus on the execution of each play and practice repetition, not just winning the championship. This disciplined process leads to success.
• The Process:
  • Researching companies.
  • Listening to earnings calls.
  • Running projections.
  • Maintaining discipline.
  • Ensuring portfolio diversification (GVD).
• Speaker's Experience: The speaker did not start the public account aiming for $668,000 in profits. Instead, they focused on the process of selecting the right stocks and managing the portfolio.
• Reality of Success: The speaker spends most of their time (98%) working on their portfolio, listening to calls, running projections, and analyzing valuations, not partying. This disciplined work ethic is what leads to financial success.
• Key Takeaway: Focus on the daily, detailed work of investing. Success, including making six figures annually, will be a byproduct of mastering the process.
• Call to Action: The speaker emphasizes that achieving significant profits is possible but requires dedication and a focus on the process, not just the outcome.

Conclusion and Call to Action

The speaker reiterates that making $100,000+ in annual profits is achievable but not easy. He highlights the success of eight individuals in his private stock group who recently reached seven figures in their portfolios, emphasizing that they achieved this through discipline and process, not by gambling.

The video concludes with an invitation to join the private stock group and access Thousandx.com for those who are serious about improving their investing strategy and moving away from speculative gambling.